Demystifying Blockchain for Businesses

Mar 17, 2023

Yellow Flower

Like many emergent industries, crypto uses language that makes understanding the fundamental ways in which it works nearly impossible. In some ways, this is by design. As new technologies incubate in the far corners of the internet, complex language serves as a gatekeeping function, and many early adopters perpetuate the obfuscation to maintain both access and exclusivity. 

Specialized language serves a purpose when technologies are being formulated, but when the basics are well understood and ready for broader adoption, it’s time to demystify the technology and democratize the access to information so that the fruits of the builders’ labors can make it to market.

Nowhere is this more true than in trying to help traditional companies understand the pure value proposition of blockchain technology. Away from the noise of DeFi and NFTs, the underlying technology is so powerful that those who ignore it will be left behind. If your business relies on record keeping and accounting, on invoicing and financing, on quality control and inventory management, you need to understand blockchain – to be clear, that’s every business on earth. 

What businesses need is a simple explanation of blockchain technology and a clear use case to really grasp why so many are convinced that crypto isn’t just the future of the internet, it’s the next great economic engine. This may not seem true today, at least at first blush, but business leaders who take the time to really consider the implications of blockchain technology will come away with only one conclusion: there’s no better time to invest in understanding not just what blockchain is, but what it can do. 

How Blockchains Work 

Blockchains are built upon distributed ledger technology, which simply means a group of connected computers in different locations use rules to agree on what information to add to a database. Couple this technology with time-stamping and cryptographically secured data, link it all together, and that’s a blockchain: a cryptographically secured, distributed, and decentralized database of chronologically listed transactions.

That’s admittedly still a tough definition to parse, so let’s try a fun analogy. Imagine you play golf with the same foursome each week, and each player has their own scorecard where they write down all of the scores. After each round, everyone compares scorecards to make sure they match. If they do match, a new "block" of scores is added to a shared notebook. This "block" contains all the recent golf scores, and it's attached to the previous scores, creating a "chain" of golf scores. This chain is called a blockchain, and provides a secure, shared history of all golf rounds between you and your friends.

Blockchains come in all shapes and sizes, but it’s easiest to start by thinking about decentralization, which really just refers to how robust and fault-tolerant a network is. The more decentralized a blockchain, the more independent copies of the data there are on the network. Some blockchain are decentralized, like Ethereum, and others fairly centralized, like Solana. For many, decentralization is the gold standard, because decentralization enables more secure networks. 

Blockchains are also transparent, meaning anyone with access to the network can see the activity. This is true for both public blockchains, like Bitcoin, and private blockchains run by governments and corporations. It may make intuitive sense that public blockchains should be transparent, but it’s just as important with private blockchains too. For example, SWIFT, which is the 11,000 member Society for Worldwide Interbank Financial Telecommunications, the world’s largest network for financial payments and settlements, is testing out blockchain technology on a private ledger — and even though non-members can’t see the transactions, all participants in that financial network can view the blockchain.

Perhaps even more important than transparency is immutability, which just means that once information is recorded on chain, it’s nearly impossible to modify or remove. Relatedly, blockchains also enable this notion of ‘trustlessness’, which is the idea that immutability gives rise to transactions that don’t require trusted third-party intermediaries, such as banks, to facilitate transactions. There’s even a fancy term for this — disintermediation.

Finally, it’s important to remember that blockchains are built using computer code, and can be endlessly customized to meet the needs of your business. If you’re interested in understanding more about blockchain technology, this thread is a good place to start:

Bankless Publishing @BanklessPub14 blockchain basics that are key to understanding what makes a blockchain so revolutionary. Explained in simple graphics and short texts. A thread 🧵👇 9:20 PM ∙ Oct 13, 202218Likes10Retweets

Armed with the basic principles, take a breath and imagine the landscape of your business and industry, and begin to think about what adopting blockchain-based systems can do for your business. If you need a bit of a spark, the simple use case of supply chain management may ignite the virtual fire to begin the process of adopting this new technology for your business. 

Supply Chain Management 

One of the most obvious examples of where blockchain can make an immediate impact for many businesses is supply chain management. As international commerce increased and supply chains became more complex, unknown parties were forced to interact and counterfeit or low-quality goods often made their way into the supply chain. Blockchain helps to alleviate these issues, as it can be used to track the entire supply chain, from raw materials to finished products, ensuring efficiency and transparency at every stage.

A recent report on how blockchain can impact the retail and consumer packaged goods industries identified four key pain points in supply chain management: traceability, compliance, flexibility, and stakeholder management. The immutable and programmable aspects of the blockchain can significantly mitigate these pain points.


We’ve also seen blockchain put to use in the automotive supply chain, with the Mobility Open Blockchain Initiative, where many of the world’s leading auto manufacturers are working to build a vehicle- and parts-tracking system on chain. Daimler is working to use the blockchain to share data amongst its offices, manufacturing centers, and suppliers. 

One of the most important supply chains for average consumers is the food supply chain. Walmart and Carrefour, two of the world’s largest retailers, have been working with the IBM Food Trust, a “collaborative network of growers, processors, wholesalers, distributors, manufacturers, retailers, and others, enhancing visibility and accountability across the food supply chain.” Carrefour, in particular, has embraced blockchain to manage its branded organic foods supply chain, giving consumers confidence in the provenance of the product and a way for the company to manage complex actions, like food recalls. 


The list of ways in which blockchain can help supply chains is not limited to food, packaged products, and cars, of course. It can be used to verify the origins of luxury goods and otherwise combat counterfeiting through traceability and quality control. It can also streamline inventory and vendor management and facilitate the instant settlement of invoicing through business-to-business on-chain payments. We are just starting to discover that the integration of blockchain technology into business operations is not just better for the consumer, but for any company’s bottom line.

Blockchain for Your Business

One way to think about what blockchains can do is that it brings brands closer to consumers. Whether that’s because of the tech behind the scenes, in the case of automobile manufacturers, or allowing consumers to see the farm-to-store journey, as with Carrefour, building systems that enable brands to better connect with their customers is a rare win-win that increases profits for companies and solidifies customer loyalty.

Supply chains are just a narrow application of blockchain technology, and many industry leaders are exploring how blockchain can improve healthcare through better sharing of patient records, remove rent-extracting actors from marketplaces like event ticketing, improve the legitimacy of elections (including shareholder voting), and build comprehensive customer rewards and loyalty programs. 

As you begin to imagine how the benefits of blockchain technology can improve your operations, one of the key considerations is to determine where intermediaries exist, and decide if your business really needs them in the middle of the transaction. Blockchain isn’t necessarily about eliminating the human element, but it is about reducing uncertainty and reliance on the unpredictability of human relations. Those ‘trusted’ third parties have been a necessary part of your business life, but what if you didn’t need them for everything? What relationships would you want to keep and why? How would your business be impacted? Only you can answer these questions, but they are some of the most important questions business leaders will grapple with in the months and years ahead. 

Hiro Kennelly is a writer, editor, and coordinator at BanklessDAO and the Editor-in-Chief at Good Morning News. He is also an Associate at Bankless Consulting, and is helping to build a grants-focused organization at DAOpunks.